Impact of Corporate Social Responsibility Disclosure on Financial
Performance: Case Study of Listed Pharmaceutical Firms
of Pakistan
Muhammad Shoukat Malik
1
•
Lubna Kanwal
2
Received: 18 January 2016 / Accepted: 18 March 2016 / Published online: 5 April 2016
Ó Springer Science+Business Media Dordrecht 2016
Abstract The intention of this paper is to examine the
impact of corporate social responsibility disclosure on
financial performance in a case study of listed Pharma-
ceutical firms in Pakistan. For this case study, the panel
data of 10 years from 2005 to 2014 are obtained through
content analysis of annual reports. Quantitative tools were
used to measure variables studied in which index was
developed and used scoring methodology. Further, brand
equity is introduced as a mediator between CSRD and
financial performance. The results of content analysis
revealed that GSK Pakistan laboratories involved in greater
level of disclosure as compared to other pharmaceutical
firms. The average rate of disclosure of listed pharmaceu-
tical firms is increasing annually. Among four themes, the
results showed that pharmaceutical firms mostly disclose
information regarding community involvement. The results
of regression which were significant shows that brand
equity act as mediator between the corporate social
responsibility disclosure and financial performance.
Keywords CSRD corporate social responsibility
disclosure Á Financial performance Á Brand equity Á ROA Á
ROE Á Market share
Introduction
In today’s world, the topic of corporate social responsi-
bility disclosure is on peak. Previously, organizations were
socially responsible but do not highlight there social
actions in the annual reports due to which investors and
information seekers are not well aware of those social
efforts made by the firms, so no such results in the form of
brand equity and financial performance were seen. Later,
these firms voluntarily start disclosing their social infor-
mation in the annual reports.
Now, society expectations are greater for more informa-
tion disclosure in the annual reports of companies. Organi-
zations not only disclose financial information but also move
from financial disclosure to corporate social reporting and
disclosure. Adversity at corporate level pushes the business
sector and its community to move toward CSR and increases
its level of disclosure (Waller and Lanis 2009) due to which
public sector firms willingly start disclosing the corporate
social responsibility actions in their financial reports sent to
stakeholders of organizations.
Through CSRD, company’s vision of social work is
made visible and the records of past performance are dis-
played. Corporate social responsibility disclosure includes
information disclosed of work done by the organization for
the well being of environment like reduction in pollution,
conservation of energy, protection of human rights
employed within the firm, the activities performed by the
firm for their community involvement etc. (Mathews
1997). Corporate social responsibility disclosure (CSRD) is
an additional demand of stake holders of a firm in which
financial disclosure of a firm is further extended. In
developing nations, although some firms have started dis-
closure of social actions but less have focused on studying
its relation with other variables (Park and Lee 2009).
& Lubna Kanwal
lubna.ryk@gmail.com
Muhammad Shoukat Malik
shoukatmalik@bzu.edu.pk
1
Faculty of Business Administration, Alfalah Institute of
Banking and Finance, Baha-ud-Din Zakariya University,
Multan, Pakistan
2
Alfalah Institute of Banking and Finance, Baha-ud-Din
Zakariya University, Multan, Pakistan
123
J Bus Ethics (2018) 150:69–78
https://doi.org/10.1007/s10551-016-3134-6
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